Life & Living

Protecting the important
in our lives

Jeremy Woodruff

Carl Lamb

Chartered Financial Planner

There is a wide range of insurance plans and policies that provide help when disaster strikes. Carl Lamb looks at the different types and explains their benefits.

The last two years have shown us just how unpredictable life can be. None of us could have anticipated the extent to which the COVID virus has affected our lives. It’s been a salutary lesson, and we’re seeing an increased interest in insurance policies that kick in when we are unable to work.

Life insurance is there for the absolute worst-case scenario: when you die, leaving your loved ones to carry on without you. It is the type of protection policy most commonly held by families.  There are several factors to consider when looking at life insurance cover:  not all cover is the same!

You should first consider whether you want to hold the insurance for a fixed period of time – perhaps while your children are young, for example – or for the whole of your life. Whole of life policies are usually more expensive as they will always pay a claim (subject to terms and conditions), whenever you die, whereas a fixed term policy may never need to make a pay-out.

If you want cover for yourself and a partner, you will also need to consider whether to take out two individual policies, or one joint policy. If you go for a joint policy, you will need to decide if you want the policy to pay out when the first partner dies, or on the second death. If it pays out on the first death, the surviving partner may wish to continue to have some kind of cover to protect family members, so will need to take out a further policy at that point.

Most life insurance policies pay out a lump sum on your death, but there is another type of insurance that you can adopt, either on its own or in addition to your life cover. Family income benefit provides a regular income to your
family for the remaining years of the term of the policy if you die while you are covered.

Selecting the right mix and level of life insurance for you and your family is an important decision. Your independent financial adviser will help you understand what cover is available and ensure that you achieve a balance between the premiums and the cover provided.

In addition to life insurance, there are two primary types of insurance you can take out as an individual to protect your family’s finances if you become ill or injured. Income protection schemes and critical illness cover may sound similar, but they have different triggers and different benefits.

Income protection is focused on your capacity to do your job. If you have an income protection policy and suffer an illness or injury (physical or mental) that makes it impossible for you to do your job, then the policy should provide support. There will normally be an initial waiting period before the cover kicks in which might perhaps be aligned with your employer’s sick pay policy. It will provide a regular monthly income – often a percentage of your normal salary – until you can return to work, retire, or if you die.  Some policies will be set up to pay you for a maximum term – perhaps one or two years – and premiums will be cheaper as a result.

Critical illness cover is a little more specific in its requirements. You would only be covered if you are unable to work because of one of a prescribed list of illnesses/injuries, at a specified level of severity. The benefits of a critical illness policy are normally paid as a one-off lump sum.

With all insurances, cover will only be available if you continue to pay the required premiums. It’s important to understand the terms and conditions of the policy – the treatment of pre-existing conditions, for example – so that you get the level of protection that you want for your family.

Any opinions expressed in this article do not constitute advice. 

Smith & Pinching are Chartered Financial Planners. If you would like a no-cost exploratory review to discuss your family protection with an adviser, call us today on 01603 789966 or email

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